Ousted IRS director apologizes to Congress

The ousted head of the U.S. tax agency says his agency's tougher treatment of Tea Party and other conservative groups seeking tax-exempt status resulted from a misguided effort to handle a flood of applications, not political bias.

Steven Miller gets hostile reception at ways and means committee

Outgoing acting IRS Commissioner Steven Miller, right, testifies Friday before the House Ways and Means Committee hearing on the Internal Revenue Service targeting conservative groups. With him was J. Russell George, the Treasury Department's inspector general for tax administration. Miller resigned on Wednesday after the revelation the IRS hard targeted conservative groups for special scrutiny. (Jason Reed/Reuters)

The ousted head of the U.S. tax agency apologized to Congress on Friday for his agency's tougher treatment of conservative groups seeking tax-exempt status. He said they resulted from a misguided effort to handle a flood of applications, not political bias.

Lawmakers from both parties harshly criticized the Internal Revenue Service at a congressional hearing over the tax targeting scandal, one of three concurrent controversies that have consumed the Obama administration this week. The government is also on the defensive over its seizure of The Associated Press' telephone records as part of an investigation into leaks and new questions about the terrorist attack in last year in Benghazi, Libya, that killed four Americans

Republicans are hoping to link the issues in an effort to raise questions about Obama's credibility and make it harder for him to press this second-term policy goals.

Trying to reset the agenda, the president turned his attention Friday to the economy during a trip to Baltimore, about 64 kilometres north of Washington, and said lawmakers should spend every day resolute on how to help it grow and get people back to work.

"Our focus cannot drift," Obama said.

At the hearing, former acting IRS Commissioner Steven Miller conceded that "foolish mistakes were made" by officials trying to handle a flood of groups seeking tax-exempt status. He said the process that resulted in conservatives being targeted, "while intolerable, was a mistake and not an act of partisanship."

Many hearings expected

The hearing is the first of what are expected to be many on the tax targeting subject by congressional panels. Underscoring the seriousness of the episode, Miller was sworn in as a witness, an unusual step for the Ways and Means panel and one that could put Miller in jeopardy if he is later shown to have misled lawmakers with his testimony.

Although Miller and another top IRS official are stepping down, the Republican committee chairman said that would not be enough.

"The reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers," said Congressman Dave Camp.

Camp also said the tougher examinations that conservative groups encountered seemed to be part of a "culture of cover-ups and intimidation in this administration." He offered no other examples.

Camp's remark about cover-ups drew a sharp retort from the committee's top Democrat, Congressman Sander Levin. Levin said if the hearing became a preview of the 2014 political campaigns, "we'll be making a very, very serious mistake."

But Levin had tough words for the IRS, saying the agency had "completely failed the American people." He also called for the ouster of another IRS official: Lois Lerner, who heads the division that makes decisions about tax-exempt groups.

Republicans have spent the past few days trying to link the improper actions of the IRS to Obama. The president has said he didn't know about the targeting until last Friday, when Lerner acknowledged at a legal conference that conservative groups had been singled out.

The agency has said between 2008 and 2012, the number of groups applying for tax-exempt status as so-called social welfare groups more than doubled. Along with that was an increase in complaints that such groups were largely engaging in electoral politics, which is not supposed to be their primary activity.

"I do not believe partisanship motivated the people" at the IRS who engaged in the harsher screening for conservative groups, Miller said.

Complaints from conservative groups

In recent months, Republicans on the Ways and Means panel had repeatedly asked the IRS about complaints from conservative groups that their applications were being treated unfairly.

On Friday, numerous Republicans wanted to know why Miller and others never told them the groups were being targeted, even after May 2012, when the IRS has said Miller was briefed on the practice. Miller was previously a deputy commissioner whose portfolio included the unit that made decisions about tax-exempt status.

Also testifying Friday was J. Russell George, the Treasury Department's inspector general for tax administration.

In a report he issued this week, George said IRS officials reported they were not politically pressured to target conservative groups. Asked about that conclusion, George said Friday, "We have no evidence at this time to contradict that assertion," but in prepared testimony to the committee he said he is continuing to investigate that question.

George's report concluded that a regional IRS office that screened applications for the tax exemptions, improperly singled out tea party and other conservative groups for tougher treatment. The report says the practice began in March 2010 and lasted more than 18 months.

Tea party groups generally advocate limited government and are critical of Obama.

The report blamed "ineffective management" for letting IRS officials craft "inappropriate criteria" to review applications from tea party and other conservative groups, based on their names or political views. It found that the IRS took no action on many of the conservative groups' applications for tax-exempt status for long periods of time, hindering their fundraising for the 2010 and 2012 elections.

Many of the groups were applying for tax-exempt status as social welfare organizations, which are allowed to participate in campaign activity if that is not their primary focus. The IRS determines whether that imprecise standard is met.